Steiner v. United States, 10370.

• Decision Date: 24 April 1943
• Docket Number: No. 10370.,10370.
• Parties: STEINER v. UNITED STATES.
• Court: U.S. Court of Appeals — Fifth Circuit

134 F.2d 931 (1943)

STEINER v. UNITED STATES.

No. 10370.

Circuit Court of Appeals, Fifth Circuit.

March 29, 1943.

Rehearing Denied April 24, 1943.

Saul Stone and Warren O. Coleman, both of New Orleans, La., for appellant.

Herbert W. Christenberry, U. S. Atty., of New Orleans, La., for appellee.

Before HUTCHESON, HOLMES, and McCORD, Circuit Judges.

McCORD, Circuit Judge.

Arthur A. Steiner, Esther E. Stein, and James R. Stewart were tried, convicted, and sentenced under five counts of a six-count indictment which charged them with use of the mails in furtherance of a scheme to defraud, in violation of Section 215 of the Criminal Code, 18 U.S.C.A. § 338. Steiner alone has appealed.

The indictment charges and the proof shows that Steiner, Stein, and Stewart evolved and put into practice a scheme to procure fraudulent reductions of tax assessments on real and personal property in the City of New Orleans, Louisiana. Steiner, a lawyer, solicited and secured taxpayer clients, agreeing for a fee to secure a tax assessment reduction from the Louisiana Tax Commission. Stewart, chief clerk in the New Orleans office of the Tax Commission, by virtue of his position of trust and confidence, had the client's assessment reduced on the tax rolls and approved by the Commission. Thereafter the taxpayer paid the taxes on the basis of the fraudulently reduced assessment, and from month to month and day to day the monies so paid were covered into the public treasuries. Stein acted as go-between for Steiner and Stewart.

The partners agreed to divide the proceeds of their nefarious scheme. Steiner charged clients a fee of usually one-half of the tax savings, and it was agreed that upon collection of such fees Steiner was to get one-fourth, Stein one-fourth, and Stewart one-half. On occasion letters were written by Steiner for the purpose of collecting fees from clients, and it is shown that Stein had statement forms printed bearing the heading "Steiner and Stein"; that such forms were used to send statements to clients; and that the forms were furnished to Stewart who mailed them to clients when he had fraudulently procured the agreed assessment reductions. By this scheme a fraud of the most reprehensible kind was perpetrated upon the State of Louisiana, its agencies, and taxpayers, in that assessments were reduced unfairly, inequitably, and fraudulently, thereby preventing collection of the full amount of taxes rightfully due.

The evidence is without dispute that Steiner and his partners defrauded the State and its taxpayers out of many thousands of dollars; that theirs was a continuous and continuing scheme whereby they reaped a rich harvest of unlawful gain not only for one year, but in many cases from year to year; and that after paying taxes for one year taxpayers would find their assessments for the new year raised, and the partners would again have the assessments fraudulently reduced, and send out bills and receive payments. With Stewart working in the Tax Commission office as chief clerk and being in charge of tax estimates and settlements and fully trusted by the Tax Commissioners, the fraudulent scheme might have indefinitely would its way through devious trails of corruption and fraud; but Steiner, having once embarked on the crime way, could not bring himself to divide the spoils as he had agreed to do. It was only one more step for him to steal from his confederates, and when he did, they commenced to complain and then to threaten him for their part of the monies which he had withheld. Cornered and trapped by his dissatisfied confederates, and facing detection and disgrace, Steiner thereupon sought out an officer of the Louisiana Bar Association and attempted to gain immunity for himself by turning informer against his partners and others whom he named and alleged were engaged in the unlawful "tax racket".

That the mails of the United States were used in furtherance of the scheme cannot, we think, be doubted. The scheme was a continuous one in which these partners in crime worked hand-in-glove to defeat the collection of lawful taxes. The mailing of letters and statements to clients for the collection of fees was a necessary, indeed indispensable, element of that scheme, for without money to bribe Stewart and divide with Stein and Steiner the partnership would have failed. The continuity of the scheme is shown by evidence that clients who withdrew their patronage had their assessments raised. There is no dispute but that tax payments were made after entry of the fraudulent assessment reductions on the tax books. Moreover, if the fees were not paid by clients it reasonably follows that Stewart, who worked the fraud to get the assessments reduced, could use his place and position to get them raised again. In one instance where a client thought a reduction from approximately $140,000.00 to $40,000.00 was too much and declined to accept Steiner's services in the matter, the assessment was caused by the partner Stewart to be raised to in excess of $80,00.00, an amount acceptable to the taxpayer. Lane Cotton Mills which dispensed with these most successful reduction services after using them for several years found that upon dismissal of Steiner its assessments soared even higher than before.

Appellant contends that the scheme to defraud the State and its taxpayers was consummated at the instant the illegal tax assessment reductions were entered on the books of the Tax Commission; and that the mails were used after the execution of the scheme and in connection with matters wholly outside the scheme to defraud. Cf. McNear v. United States, 10 Cir., 60 F.2d 861; Dyhre v. Hudspeth, 10 Cir., 106 F.2d 286; Spillers v. United States, 5 Cir., 47 F.2d 893; Stapp v. United States, 5 Cir., 120 F.2d 898. The case at bar is not controlled by those decisions, for here the scheme to defraud had not come to an end when the mails were used. Unless money came in, the scheme would not and could not operate, for Stewart, the keyman with access to the tax rolls, Steiner, the soliciting lawyer, and Stein, the go-between, were all in the scheme for what they could get out of it. The collection of fees for "services rendered" was an integral part of the continuous and operating scheme to defraud, and the mails were used to accomplish their collection. When one of the schemers used the mails for collection of fees in furtherance of the fraudulent scheme, all defendants being partners in crime, were responsible for the mailing. Tincher v. United States, 4 Cir., 11 F.2d 18; Hart v. United States, 5 Cir., 112 F.2d 128.

Under Section 215 of the Criminal Code, the mail fraud statute, it is sufficient to charge and prove that there was a scheme to defraud; that the mails were used or caused to be used in furtherance of the scheme; and that the scheme was one which "reasonably contemplated the use of the mails". A careful review of the evidence in this rather lengthy record discloses that the government proved the essential elements of the offenses charged, and that there was no fatal variance between the charges and the proof. Spivey v. United States, 5 Cir., 109 F.2d 181; Corbett v. United States, 8 Cir., 89 F.2d 124; Guardalibini v. United States, 5 Cir., 128 F.2d 984; United States v. Lowe, 7 Cir., 115 F. 2d 596; Hart v. United States, supra.

Steiner attacks the sufficiency of the evidence to show the mailings alleged in the first two counts of the indictment, and further alleges that for purposes of venue there was no proof that the letter in the second count was mailed in New Orleans. The statement forming the basis of the first count was introduced in evidence. It was on the billhead of "Steiner and Stein", and was addressed to Longino & Collins, 3801 Tulane Avenue, New Orleans, La. The witness R. K. Longino produced the letter from his files, and testified that the statement was found with the stamped and postmarked envelope pinned to it. The bill bore date of December 31, 1938, and the envelope bore a postmark dated January 4, 1939. The witness Hugh M. Wilkinson, to whom Steiner had revealed the details of the scheme, and who had discussed a similar statement with Steiner, testified that Steiner had said that when a customer failed to pay the agreed fee, "Stewart himself would mail this bill on the billhead of Steiner and Stein * * *." The collection letter forming the basis of the second count was written to Intertype Corporation, 360 Furman Street, Brooklyn, New York. The letter was typed for Steiner by his secretary; it requested payment of the account "by return mail". The letter bore date of February 12, 1938,...